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Is a Beat Ahead for Murphy Oil (MUR) this Earnings Season?
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We expect independent oil & gas exploration & production company Murphy Oil Corporation (MUR - Free Report) to beat expectations when it reports second-quarter 2016 results on Jul 27, after the market closes. Last quarter, the company had reported a positive earnings surprise of 24.14%, bringing the trailing four-quarter average to 23.34%.
Let’s see how things are shaping up at the company prior to this announcement.
Why a Likely Positive Surprise?
Our proven model shows that Murphy Oil is likely to beat earnings because it has the right combination of two key ingredients. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) to be able to beat estimates and Murphy Oil has the right mix.
Zacks ESP: The Earnings ESP which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +13.51%. This is because the Most Accurate Estimate stands at a loss of 32 cents while the Zacks Consensus Estimate is pegged at a loss of 37 cents.This is a meaningful and leading indicator of a likely positive surprise.
Zacks Rank: Murphy Oil currently carries a Zacks Rank #2 (Buy). The combination of Murphy Oil’s Zacks Rank #2 and positive ESP makes us reasonably confident of a positive surprise this season.
Conversely, we caution against Sell-rated stocks (#4 and #5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Murphy Oil is currently streamlining its operations through asset divestments to focus extensively on E&P ventures in the U.S. A systematic asset divestment strategy will enable Murphy Oil to fund projects that support its long-term growth strategy.
The recent improvement in oil prices should also have boosted the performance of the company. For the second quarter, the company has WTI (“West Texas Intermediate”)-based oil price hedges for 20,000 barrels per day at an average price of $52.01.
Moreover, for 2016, Murphy Oil has undertaken cost-saving initiatives and planes to reduce its capital expenditure by 62% to $825 million from the 2015 levels, which will help the company improve its financial flexibility.
On the flip side, due to the sale of the Syncrude assets and wildfires in Canada in the second quarter, Murphy Oil now expects production to decline by 8,400 barrels oil equivalent per day (Boe/d) in the quarter from its prior guidance of 177,000–180,000 Boe/d
Other Stocks to Consider
Murphy Oil is not the only company looking up this earnings season. We see likely earnings beats coming from these companies as well:
Chesapeake Energy Corp. (CHK - Free Report) has an Earnings ESP of +12.50% and a Zacks Rank #2.The company will report quarterly results on Aug 4.
Noble Energy, Inc. has an Earnings ESP of +6.25% and a Zacks Rank #2. The company will report quarterly results on Aug 3.
WPX Energy, Inc. has an Earnings ESP of +30.00% and a Zacks Rank #2. The company will report quarterly results on Aug 4.
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Is a Beat Ahead for Murphy Oil (MUR) this Earnings Season?
We expect independent oil & gas exploration & production company Murphy Oil Corporation (MUR - Free Report) to beat expectations when it reports second-quarter 2016 results on Jul 27, after the market closes. Last quarter, the company had reported a positive earnings surprise of 24.14%, bringing the trailing four-quarter average to 23.34%.
Let’s see how things are shaping up at the company prior to this announcement.
Why a Likely Positive Surprise?
Our proven model shows that Murphy Oil is likely to beat earnings because it has the right combination of two key ingredients. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) to be able to beat estimates and Murphy Oil has the right mix.
Zacks ESP: The Earnings ESP which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +13.51%. This is because the Most Accurate Estimate stands at a loss of 32 cents while the Zacks Consensus Estimate is pegged at a loss of 37 cents.This is a meaningful and leading indicator of a likely positive surprise.
Zacks Rank: Murphy Oil currently carries a Zacks Rank #2 (Buy). The combination of Murphy Oil’s Zacks Rank #2 and positive ESP makes us reasonably confident of a positive surprise this season.
Conversely, we caution against Sell-rated stocks (#4 and #5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
MURPHY OIL Price and EPS Surprise
MURPHY OIL Price and EPS Surprise | MURPHY OIL Quote
Factors to Consider
Murphy Oil is currently streamlining its operations through asset divestments to focus extensively on E&P ventures in the U.S. A systematic asset divestment strategy will enable Murphy Oil to fund projects that support its long-term growth strategy.
The recent improvement in oil prices should also have boosted the performance of the company. For the second quarter, the company has WTI (“West Texas Intermediate”)-based oil price hedges for 20,000 barrels per day at an average price of $52.01.
Moreover, for 2016, Murphy Oil has undertaken cost-saving initiatives and planes to reduce its capital expenditure by 62% to $825 million from the 2015 levels, which will help the company improve its financial flexibility.
On the flip side, due to the sale of the Syncrude assets and wildfires in Canada in the second quarter, Murphy Oil now expects production to decline by 8,400 barrels oil equivalent per day (Boe/d) in the quarter from its prior guidance of 177,000–180,000 Boe/d
Other Stocks to Consider
Murphy Oil is not the only company looking up this earnings season. We see likely earnings beats coming from these companies as well:
Chesapeake Energy Corp. (CHK - Free Report) has an Earnings ESP of +12.50% and a Zacks Rank #2.The company will report quarterly results on Aug 4.
Noble Energy, Inc. has an Earnings ESP of +6.25% and a Zacks Rank #2. The company will report quarterly results on Aug 3.
WPX Energy, Inc. has an Earnings ESP of +30.00% and a Zacks Rank #2. The company will report quarterly results on Aug 4.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>